Voice over IP promises huge cost savings, yet companies are hanging
back from investing in the technology. Philip Hunter
investigates
Small and medium-sized enterprises (SMEs) lay the turf while large
enterprises should prepare for voice/data integration but be in no
hurry to do it. Voice/data will increase, not diminish, dependence
on single suppliers such as Cisco, Nortel, Avaya. Virtually all
voice will be carried as IP packets within five to 10 years, and
the question, therefore, is not whether to migrate, but when. Huge
savings in equipment costs and network administration are promised.
And yet many larger enterprises, in particular, seem to be delaying
the day as long as they can.
The main reason for the delay, according to BT's marketing manager
for convergent telephone systems Nick Malyon, is that the
investment in a converged voice/data solution can often be
justified only when it is time to replace existing phone systems
anyway. "Purchases tend to be led by a business event such as
replacement of an old PBX [private branch exchange] or move to a
new site," he says.
When such an event occurs, however, enterprises often seem willing
to pay a premium to install phone systems that can be plugged into
an IP data network even when there is no immediate intention of
doing so. "A lot of our customers are paying more for a platform
that can be upgraded later on," said Malyon. The precise premium
varies, but is usually about 15% to 20% above the cost of a
voice-only solution. IP phones cost more than standard handsets,
and there may be more to pay for a PBX that can transmit voice over
an IP network.
This equipment premium is not the only cost associated with a
migration to voice over IP (VoIP). The data network may need
upgrading to carry voice with sufficient quality of service. Extra
bandwidth may be needed over the wide area. And if the intention is
also to migrate voice traffic from traditional phone wiring to a
local area network (Lan) within the sites, existing Lan switches
may need replacing as well. So the Lan, too, can retard migration
to all-out VoIP - at least until it needs upgrading for other
reasons. And they have to be good reasons, for the era of regular
upgrades for their own sake vanished with the bursting of the
dotcom bubble.
The immediate case for migration to VoIP, irrespective of whether
the time has come to replace voice or data systems anyway, is
economic and administrative. Over the wide area, the ability to
fold voice into an existing data network saves on dial-up charges,
and can cut administration significantly because there is just one
network to manage. The same applies to Lan telephony, but then
there are additional savings through having just one physical
cabling system instead of two. Apart from reducing cabling costs,
this simplifies changes within the office because adding,
relocating and removing users is now a single operation for both
phone and PC. It is just a matter of plugging a PC into the Lan for
automatic configuration and downloading software to turn it into a
phone, or to have a separate VoIP handset feeding off it.
Taking into account these apparent cost savings, most enterprises
could make a sound case for an immediate migration to VoIP, even in
some cases where this would mean replacing existing systems before
the end of their useful life.
But such return on investment (ROI)arguments are often illusory for
large enterprises, which is one reason why many are reluctant to
make significant investments in voice/data integration for its own
sake, says Sandy Aitken, mobile business leader for Europe at
consultancy group Pricewaterhouse Coopers. ROI calculations are
often made in isolation, on the false assumption that technology
never changes, Aitken warns. Enterprises should consider voice/data
integration in the context of the whole IT infrastructure and the
wider business processes, Aitken insists. "Otherwise, an enterprise
may save $50,000 (£31,850) on networking infrastructure through
migrating to VoIP when they could have cut costs by $20m through
business process change."
Aitken points to the growing use of hands-free and even cell phones
within offices, which could mitigate the assumed savings through
combining voice and data over a common fixed-cable network. If a
business also implemented a wireless Lan, then the investment in
VoIP and IP phones would become a waste of money. Most office
phones and PCs are still attached to fixed wires, but the trend
towards all things wireless is continuing, and so the case for VoIP
may be less compelling for some sites than for others.
"Enterprises need a convergence strategy based on answers to the
questions: what do you use? why do you use it? how do you minimise
costs and maximise advantages?" says Aitken. "That's why some
enterprises are investing in Digital Enhanced Cordless Terminal and
GSM dual handsets in their offices so staff can still use their
mobiles in the office without incurring cellular call charges while
on site." Such a strategy, he says, will often save far more than a
move to VoIP.
On the other hand, there are circumstances where the case for VoIP
is compelling - notably within call centres, particularly when
agents are working from home. VoIP makes it easier to manage
homeworking agents and route calls to them, because both the voice
and associated data such as customer details can be transferred via
a single IP session. Without VoIP, the task of co-ordinating voice
and data within a call is much harder, although not impossible.
In the case of homeworking call centre agents, VoIP will save money
on both communications costs and equipment such as handsets and fax
machines, which can be incorporated into a PC. But the real prize
lies in improved staff retention through better quality of life,
according to Neil Strenge, product marketing manager at phone and
data systems company Siemens Network Systems. "Staff churn within
traditional call centres is often 30%, which is expensive given the
high costs of training," he says. "Already some call centres have
reduced that significantly by allowing agents to work from home on
the back of IP telephony, and this is having a huge impact on their
profitability." The potential for assisting with beneficial changes
in working patterns, then, constitutes another part of the bigger
business picture that needs to be considered when migrating to
VoIP.
The case for IP telephony within call centres is also strong where
alternative channels of communication are supported, such as e-mail
and Web chat. "With IP telephony, you can have a single queuing
server for all channels, making it much simpler to manage the
process," says David Mackenzie, principal consultant at CT
Consulting, a specialist in voice/data integration.
For SMEs, voice/data integration is often easier to justify because
the bigger picture is not so vast, and cost savings are easier to
determine, according to Aitken. "Smaller firms have a better idea
of what their fixed costs are," he says. "Big companies haven't a
clue."
Largely for this reason, IP telephony has been unusual in that SMEs
rather than large enterprises are at the leading edge. RSPCA has
installed end-to-end VoIP both within its Lans and its wide area,
based on a clear cost justification. The charity estimated that it
would save £2m over five years on equipment and ongoingmaintenance.
Similarly, the Greater London Authority has installed a Lan in
readiness for a move to VoIP in the near future. A persuasive
factor is that, for a new site, it costs little more to make the
data network ready for IP telephony, with the latest Ethernet
switches being capable of supporting the necessary quality of
service. The major cost for greenfield sites comes on the voice
side, especially in IP phones.
Whatever the size of the enterprise, the full potential for savings
will not be realised unless voice/data integration at the technical
level is accompanied by convergence between the respective teams.
"There has to be convergence of people as well as of networks,"
says Andy Palmer, regional vice-president at Lan and VoIP switching
supplier Foundry Networks. The traditional divide between the voice
and data departments needs to be dissolved, and the skills
transferred into a common communications team.
Strenge says the best way of effecting this convergence between
people is to bring the voice skills into the data department rather
than the other way round. Voice, after all, is just a form of data,
and should be considered alongside other channels of communication
such as e-mail.
It is important, though, that voice skills are retained, because
voice does have unique requirements in terms of quality and user
expectation. Within a large enterprise there will be varying
requirements for voice quality, and this should be considered when
investing in converged solutions. For some internal communication,
lower voice quality can be tolerated, given that in many cases
staff use their mobiles rather than a desk phone anyway, preferring
convenience to sound fidelity. There can be scope for saving by
compressing more voice channels into a given bandwidth for some
internal links, while maintaining maximum quality where customers
or business partners are involved, such as in a call centre.
The other important considerations are security and service
availability. Traditional circuit-switched phone services have
scaled great heights of availability. And they are also highly
immune to security threats - notably, denial of service attacks, to
which data networks are vulnerable. However, with VoIP, voice
becomes another form of data, and susceptible to the same threats
and availability levels. It is now possible to make data networks
as reliable as circuit switched voice with inbuilt redundancy, and
also to insulate the VoIP component to a large extent from denial
of service attacks, but this all comes at a price.
Part of this price is a greater dependence on a single supplier
providing a one-stop shop. Traditional telephony is based on mature
signalling standards that have made it possible to mix and match
PBX suppliers. But with IP voice, there are no agreed standards for
negotiating quality of service along end-to-end paths involving
multiple suppliers. So most consultants recommend accepting that
your network will all come from one major supplier. "To get the
best quality, it is difficult to mix and match. You are better off
with a single supplier," says Mackenzie.
This may be another reason why some enterprises are holding back
from a major investment - waiting for universal peering standards
that enable quality of service for voice to be guaranteed across a
multi-supplier network. But it is almost certainly a mistake to
make major purchases of traditional PBXs rather than systems that
are at least capable of IP telephony, for that is the way the world
is going.